Country Report: Mexico - Pharmaceutical Executive


Country Report: Mexico
Shaking Up the System

Pharmaceutical Executive


According to industry data, the pharmaceutical sector represented 7.2% of Mexico's manufacturing GDP last year. When compared to other manufacturing industries in Mexico, this is significant, but by no means in star place.

The presence of foreign and local clinical research organizations (CROs) has also increased substantially over the last few years. This is both as a result of a recent tightening of regulations, and a sign that Mexico is becoming more strategic for foreign investors.

But can we call Mexico a real 'hub' for the pharmaceutical industry?

Miguel A. Salazar, General Director, Boehringer Ingelheim Mexico
This June, the 21st Convention of CANIFARMA was held in Merida in the State of Yucatan. The event culminated in defining the sector's development plan concerning the coming period 2012-2018. The first phase defined 54 courses of action representing the strategic points that can empower the industry. The second phase was the integration of the industry's first census in Mexico, delivered in Merida.

The census concluded that of course it was necessary for the 186 companies that make up CANIFARMA to come together to turn the industry into an authentic generator of jobs, attractive for new investments, but with a special focus on manufacturing.

Rafael Gual of CANIFARMA clearly states, "Our goal is to make the Mexican pharmaceutical industry the biggest manufacturing sector in Mexico over the next 5 to 6 years. Currently pharmaceutical manufacturing represents 7% of manufacturing GDP in Mexico, and we want to push it into first place."

In 2008 COFEPRIS abolished articles 168 and 170 of pharmaceutical legislation, which meant that companies no longer needed a plant in Mexico in order to distribute their products in the country. Since then, five companies have entered the market without a Mexican manufacturing plant. This includes Spanish company Menarini, Daiichi Sankyo from Japan, and Swedish Meda Pharma. But it also resulted in several multinationals re-assessing their Mexican manufacturing strategies as plants were no longer required to be part of the market.

Facilities of Boehringer Ingelheim
Miguel A. Salazar, general director of Boehringer Ingelheim Mexico points out, "The pharmaceutical real estate market is getting crowded because everyone is selling their plants."

There are some obvious benefits in setting up a manufacturing hub for Latin America in Mexico, as compared to Brazil. Labor costs are significantly lower, it is geographically very strategic bordering the United States, and Mexico also shares a common language with most of the region.

"In 1995, Boehringer Ingelheim wrote their manufacturing strategy and decided that Mexico was to be a center of excellence in terms of manufacturing, and the company invested more than 70 million USD in a new plant which would be one of the manufacturing hubs for the rest of the world." says Salazar, confident of the company's award-winning plant located in the south of Mexico City.

"Around 60% of our products are exported globally and 40% is local. We are focused on high quality and high delivery." He continues.

Along the same lines, Bertrand Baron of Sanofi comments, "Today we have three manufacturing sites in total and we strongly believe in increasing our business in Mexico... 80% of what we sell in terms of volume is coming from our local plant. I would be shooting myself in the foot if I withdrew our Mexican plant."

Despite these multinationals here to stay, how can the industry live up to Gual's tough target of becoming the number one manufacturing sector for the country? Socorro España Lomeli of ANAFAM strongly believes that the government should play a bigger role, especially when it comes to local companies.

"I believe fiscal incentives are very important because they encourage industries to grow," she concludes.

These fiscal incentives have not only been suggested for manufacturing in Mexico, but also for research and development, specifically clinical trials. Mexico has traditionally been a strong choice for performing clinical trials due to the wide-ranging demographic and different climates. The combination gives rise to a sufficiently diverse patient pool. Moreover, due to the rapidly growing Hispanic population in the United States it will become more and more important to have a Mexican clinical subset in every trial.

Salazar agrees: "There is not one single clinical trial in the company in which Mexico is not participating. It has allowed us to gain rapid approvals for products due to the preference given to clinical trials performed in Mexico with Mexican researchers and Mexican patients. COFEPRIS is willing to give fast-track approval when they see Mexico getting involved." Bertrand Baron concurs:

"Last year we did 102 clinical trials in Mexico with almost 1,000 researchers participating in them. Mexico has been a significant participant in one of our most important R&D projects which is the dengue vaccine development. All of Sanofi's research in [Latin America] is managed from here"

However, Mexico has not seen as large an investment in clinical trials as it could have. Arturo Rodriguez, director of Mexican CRO, Infinite Clinical Research, believes it has to do with administrative inefficiency.

"It now takes almost triple the time to get approvals, which sometimes means we lose out on clinical trials because customers move them to other countries, predominantly in Asia." However, he admits that, "Today, the regulation process length can be attributed to the audit from the Pan American Health Organization, which spurred the harmonization with international guidelines, in turn making Mexico competitive on an international level."

Mexico will be holding the annual Latin American CRO Congress later this year: a key indication that they are taking a more active role in promoting clinical trials in the country.

Can Mexico reach its so far unreached potential as a pharmaceutical production and clinical trial hub for Latin America? Perhaps if we take the tightening regulatory environment, the imminent PAHO approval of COFEPRIS, and the stable economic situation, combined with relatively low labor costs and the geographically strategic position, things get more interesting. Put these factors together with the 186 CANIFARMA member companies joined in a common and determined goal... watch this space!


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